Should I finance a 3-year old car?
"Is it smart to finance a 3-5 year old used car. I've always gotten used cars, but I would like to get a newer car for my next car."
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Answered on Jun 25, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
“It is a common misconception that you are going to lose money on a car if you finance it.
Whether you lose money depends on:
- the car itself
- your interest rate
- length of the loan term
- amount of your down payment
If you buy a car with a high rate of depreciation and finance it for 6-years at 10%, you will lose money.
However, if you pick a car that holds its value and finance the car for 6-years at 3% but pay the loan off in the first year, you will very likely make money on that car.
As long as you pick a used car that has a slow depreciation rate, get a good financing rate, and pay the loan off quickly, financing a three-five-year old car is not a bad idea.”
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